Finance Ministry reviews IDBI working

By Our Special Correspondent

NEW DELHI, AUG. 8. As part of the review programme of the financial institutions under its charge, the Finance Ministry today took a look into the functioning of the Industrial Development Bank of India (IDBI) that has reported declining profits in the last three years.

Last week, the Ministry had reviewed the functioning of the Industrial Finance Corporation of India (IFCI) and had approved a bailout package of Rs. 1,000 crores in two instalments of Rs. 400 crores and Rs. 600 crores, respectively.

Though IDBI is not in a situation where it requires any bailout, the institution has been reporting lower profits in the last three years. IDBI's net profit during 1998-99 was Rs. 1,258.90 crores which came down to Rs. 947 crores in 1999-2000 and further to Rs. 691 crores during 2000-01. However, it has made a net profit of Rs. 181.90 crores in the first quarter of the current fiscal. During the meeting today, the discussion is reported to have centred around IDBI's long term strategy where it wants to move over to the concept of universal banking that would see the institution providing a host of financial services. IDBI's plans of mobilising about Rs. 3,000 crores through bonds this fiscal also figured in the discussions along with some proposals to retire high cost debt.

The question of non-performing assets (NPAs) also came up at the meeting and it is understood that the institution has indicated that it plans to bring down the NPAs to below 10 per cent of its total lendings by end of the current fiscal.

For its transition to universal banking, the IDBI is understood to have made some proposals to the Reserve Bank of India like changes in prudential guidelines and flexibility in liquidity norms . These proposals will be studied by the RBI

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Section  : Business
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